KUALA LUMPUR, Dec 10 — The implementation of Phase 1 of the National Digital Network (JENDELA) initiative is expected to get underway in 2021 if there are no major changes in the political landscape in the country, said CGS-CIMB Research.
The research house expected to see tenders for extending fibre premises passed, with JENDELA targeting 1.25 million new fibre premises in 2021 and an additional 930,000 in 2022.
This comes after the Malaysian Communications and Multimedia Commission (MCMC) announced in November 2020 that the submission of tenders at 1,661 new sites nationwide involving an investment of RM4.6 billion will be closed on March 31, 2021, with infrastructure deployment to take place over the following 12-18 months.
“MCMC does not expect to resort to enforcement and will not impose the Mandatory Standard on Quality of Service (QoS) to reach the 96.9 per cent 4G coverage target by end-2022, but will instead help telecommunication companies (telcos) get there by reducing red tape and other hindrances to roll-out at the state level,” it said in a note today.
Therefore, CGS-CIMB has maintained its “neutral” rating on the overall local telco sector with preference for the fixed to mobile segment as they have more assured growth prospects.
“We prefer fixed to the mobile segment due to multiple drivers and relatively benign competition, while we still expect the latter’s revenue growth prospects to be weak in the forecast financial year 2021 (FY21F) due to tight competition,” it said.
The research house has made a ‘buy’ call for Telekom Malaysia Bhd (TM) with a target price (TP) of RM5.60, and ‘hold’ calls for Maxis Bhd and Digi.com Bhd with TP of RM5.10 and RM4.15 respectively.
As at 3.30pm, TM’s share price rose 6.0 sen to RM5.19, while Maxis added one sen to RM5.01 and Digi.Com shed 3.0 sen to RM4.12.
Meanwhile, CGS-CIMB believed there will be no major changes to The Access List and Mandatory Standard on Access Pricing (MSAP) for the 2021-23 period.
It also believed that mergers and acquisitions among telcos may resurface in 2021 as it represents ways to create significant value in a saturated mobile market, supported by the current low interest rate environment.
“However, we believe this may not be imminent in the near term, as we gather players still need to discuss or agree on the commercial terms,” it said. – BERNAMA